BALANCE
In October, the International Nickel Study Group (INSG) raised its estimate of nickel market surplus in 2025 to 209,000 tonnes from the previous 198,000 tonnes. The primary reason for the surplus is the growth in production of various nickel products in Indonesia. In 2024, the INSG estimated the surplus at 112,000 tonnes.
In 2026, the surplus is expected to increase again, to 261,000 tonnes, according to the INSG.
Nickel market balance, supply, and demand from 2015 to 2025:
Source: INSG
According to the Norilsk Nickel estimates, the market surplus, on the contrary, will decline to 120,000-130,000 tonnes in 2025-2026 from 170,000 tonnes in 2024. The total surplus will largely depend on the stability of demand for Class 1 (high-quality) nickel in China and the pace of production growth in Indonesia, according to the company.
Wood Mackenzie believes the nickel market will remain oversupplied until at least 2030.
Until recently, low-quality nickel (Class 2) used primarily for the stainless steel production accounted for the bulk of the surplus. This surplus was driven by an increased production of nickel pig iron (NPI) in Indonesia. Limited supply of Class 1 nickel used for the production of batteries supported the metal prices: only this type of metal meets the exchange standards, while Class 2 products remain outside the London Metal Exchange (LME) system. The situation changed in 2023-2024 when China’s operators mastered the technology of processing Indonesia’s low-grade nickel into high-grade Class 1 products. This was good for the metal exchange, as increased physical liquidity helped restore confidence after the price crisis of spring 2022, but it was very bad news for all nickel producers outside Indonesia and China. This resulted in an increase in the exchange nickel warehouse stocks that put pressure on prices.
Now, the surplus has shifted to Class 1 nickel used in batteries, while Class 2 nickel, including NPI, is returning to balance amid the shutting down of many producers and rising stainless steel production in China, according to Wood Mackenzie.
Nickel price and stocks dynamics in 2024-2025:
Source: INSG
DEMAND
The INSG expects global nickel demand to increase to 3.601 mn tonnes in 2025 from 3.419 mn tonnes in 2024. In 2026, nickel consumption is expected to rise to 3.824 mn tonnes.
In early 2025, the demand growth for nickel was stronger than expected driven by investments in the artificial intelligence (AI) in the USA, fiscal stimulus in China, and increased trade in anticipation of a hike in tariffs. However, demand is set to slow in 2026; tariffs could further impact trade, investments, labor markets, and prices, the INSG believes.
In stainless steel production sector, the growth is expected to continue in 2025 and 2026, according to the INSG. However, the expansion of the use of nickel in batteries is slower than expected. This is due to the growing share of non-nickel chemicals (particularly lithium iron phosphate (LFP)) and higher demand for plug-in hybrid electric vehicles (PHEVs) at the expense of battery electric vehicles (BEVs).
Norilsk Nickel’s demand estimates are similar. The company expects the demand for primary nickel to increase by 5% in 2025, to 3.62 mn tonnes, and by 6% in 2026, to 3.82 mn tonnes. The consumption is expected to grow by 5% in the stainless steel production amid the increased production in China; the consumption is expected to grow by 7% and 8% in the alloy and special steel production, respectively, thanks to robust market conditions in the aerospace and oil and gas sectors. However, demand for nickel for the electric vehicle batteries is expected to decline by 1% due to sluggish EV sales and an increased share of LFP batteries.
In the first half of 2025, primary nickel consumption remained stable, according to the Norilsk Nickel’s press release. This was driven by growing demand in the special steel and alloy production sectors, as well as strong investment demand in China. The consumption of the primary nickel for the stainless steel production remained stable, while the nickel-containing battery sector saw a decline in output.
SECTORS AND CONSUMPTION MARKETS
The stainless steel production sector remains the most significant market for the consumption of primary nickel, accounting for 70% to 80% of the demand for it, although its share has gradually declined since the peak in 2020 due to rising demand for nickel used for electric vehicles.
Nickel demand by sector in 2020 and 2024:
According to the World Stainless Association, global stainless steel production by steelmakers increased by 7% from 2023 to 2024, to a total of 62.6 mn tonnes. In the first half of 2025, the production increased by 5.2% to 31.84 mn tonnes. Currently, just under 70% of primary nickel is used in stainless steel production. Growing demand for nickel in lithium-ion batteries is expected to increase the share of demand in this segment in the coming years.
However, demand from the electric vehicle production sector is lower than expected. This is explained by the removal of government subsidies and the recent shift in consumer preferences towards plug-in hybrid electric vehicles (PHEVs) over battery electric vehicles (BEVs). Equipped with both an electric motor and an internal combustion engine, PHEVs use less nickel due to their more compact batteries.
The growth in the plug-in hybrid market:
Asia’s share of global primary nickel consumption will grow to 86.9% in 2025, according to the INSG estimates. Demand in China was up 4.3% in 2024 and is expected to show a further 5.8% increase in 2025. China is the world’s largest consumer market and according to forecasts, will account for 63.5% of the global primary nickel consumption this year.
The stainless steel production sector remains the main driver of demand for nickel in China; the effect of the battery production segment is growing, albeit at a slower pace than previously estimated. Indonesia where stainless steel production began in 2017 became the second-largest nickel consumer in the world in 2020, overtaking Japan when the nickel consumption reached 210,000 tonnes. In 2025, the nickel consumption in Indonesia is expected to grow by 8.6% year-on-year, to nearly 400,000 tonnes. Indonesia is also active in developing its battery and electric vehicle recycling industry, which is expected to increase the domestic nickel consumption.
COMPETING BATTERY TYPES
In addition to the effects of increased competition between different types of electric vehicles, demand for nickel is also constrained by the increasingly growing popularity of cheaper lithium iron phosphate (LFP) batteries. That is why nickel is unable to fully benefit from the growing global EV sales, the bulk of which accounts for China, where LFP batteries already dominate. Globally, their share reached 50% in 2024, displacing batteries with various nickel contents. Wood Mackenzie expects the share of nickel-free precursors to exceed 55% by 2030, although nickel precursors accounted for 55% in 2020.
The industry consensus that projected demand for nickel used in batteries to grow to 1.5 mn tonnes by 2030, was revised in the first half of this year down to 967,000 tonnes. Nickel consumption in the battery production sector last year was 518,000 tonnes. Norilsk Nickel estimates that nickel consumption in the battery sector will decline by 1% in 2025, to 479,000 tonnes amid sluggish electric vehicle sales and the growing share of LFP batteries.
The slowdown in the use of nickel for the battery sector is reflected in the INSG’s statistics: in China, after steady growth since 2020, the production of precursors used to manufacture various types of nickel-containing batteries started declining in 2023-2024. In Europe, amid a general slowdown in demand for electric vehicles and the growing competition from Asian manufacturers, there is also a growing focus on nickel-free LFP batteries, which has a negative effect on the demand for nickel in this sector.
LFP battery adoption, 2022 to 2024:
The INSG expects that new projects for the production of three-component cathode active material precursors (pCAM; these precursors contain nickel, cobalt, and manganese/aluminum) in various parts of the world will contribute to the growing nickel consumption in future.
Norilsk Nickel expects a moderate increase in the use of nickel in batteries by 6% (to 507,000 tonnes) in 2026 due to a planned recovery in sales of electric vehicles with nickel batteries, particularly in Europe and the USA, as well as increased precursor production outside of China, primarily in South Korea and Morocco.
EXTENDED-RANGE ELECTRIC VEHICLES
The trend towards expanded production of another type of electric vehicles - extended-range electric vehicles (EREVs) - is positive for nickel. They primarily use lithium-ion (Li-ion) batteries, such as NMC (lithium nickel manganese cobalt oxides) ones, which have a high energy density. Unlike other hybrid vehicles, the internal combustion engine in this type is not responsible for propulsion, but only recharges the battery as needed, making it rather an EV than a conventional hybrid one. EREVs are typically used in the SUV and commercial vehicle segments. This type of electric vehicles has a longer range, is more environmentally friendly and efficient, and is potentially independent of charging stations.
In the McKinsey’s scenario, the cost of production of EREV powertrains with an NMC battery and a total range of 500 miles (800 km) could be 30% to 40% lower than the cost of production of similar EV powertrains.
EREVs currently account for about 8% of total electric vehicle sales, and this type is gaining popularity in China, the world’s largest auto market. Last year, sales of EREVs, like plug-in hybrids, grew faster in the Chinese market than the EV sales. EREV sales surged by 79% to 1.2 mn vehicles, plug-in hybrid sales rose by 76% to 3.4 mn, while all-electric vehicle sales grew by 23% to 6.3 mn vehicles. The boom in hybrid vehicle sales in China and globally have prompted more traditional automakers previously focused solely on expanding their EV offerings to add gasoline-electric vehicles to their model line-ups.
According to forecasts provided to Reuters by one major automaker, EREVs and plug-in hybrids will collectively account for about 35% of sales in China, compared to about 45% of conventional EV sales.
PRODUCTION
According to the INSG, global primary nickel production is expected to grow by more than 6% in 2025 (to 3.81 mn tonnes), following a 9.8% growth in 2023 and a 4.8% growth in 2024. In 2026, the production of primary nickel will increase to 4.085 mn tonnes.
The lion’s share of global nickel is produced in Asia, where the production is expected to grow by 7.5% this year to 3.056 mn tonnes. Indonesia’s plans are to increase the nickel production from 1.609 mn tonnes to 1.750 mn tonnes, thereby strengthening its position as the world’s leading producer, followed by China with 1.029 mn tonnes and 1.095 mn tonnes, respectively.
Although Indonesia has recently stepped up the efforts to tighten control over its mining sector, including the delayed issuing of mining permits and a withdrawal of land from companies when no reclamation guarantees are given, the impact on nickel raw material production was temporary or limited, the INSG notes. The output of various nickel products will continue to grow in both 2025 and 2026. Furthermore, Indonesia’s exports to European steelmaking plants have begun for testing as potential feedstocks.
According to the Macquarie’s estimates, Indonesia increased the output of nickel products by 21% year-on-year in the first half of 2025, to 1.3 mn tonnes, accounting for 69% of the global production.
In China, the downward trend in crude nickel production and the growth of cathode nickel production are expected to continue. The production of sulfide nickel (the raw material for cathode nickel) will decline in 2025 amid lower demand for batteries, but is expected to recover in 2026.
In other regions, primary nickel production is declining, mainly due to lower profitability caused by low nickel prices. According to the Macquarie’s analysts, half a million tonnes of nickel has left the market in recent years. Nickel supplies from China and Indonesia have grown by an average of 15% to 20% per year since 2019, while the supplies from the rest of the world have declined by approximately 5% per year over the same period, according to the Wood Mackenzie’s estimates.
Norilsk Nickel notes that the production remains under pressure from operational risks in Indonesia that could impact nickel output in this country. These include nickel ore availability, increased royalties for the nickel industry, and the continued decline in nickel ore grades. As a result, Norilsk Nickel takes into account the potential production constraints equal to 150,000 tonnes in 2025 and 180,000 tonnes in 2026. Taking all this into account, Nornickel expects the global nickel production to grow by 4% to 3.74 mn tonnes in 2025 and by 6% to 3.95 mn tonnes in 2026, respectively.
According to Nornickel, the nickel production showed moderate growth in the first half of 2025, explained by increased supply of Indonesia’s NPI and nickel metal amid the introduction of new capacities in China and Indonesia. This factor was partially offset by the declined production of China’s NPI, ferronickel, and chemical nickel compounds due to the increased share of LFP (lithium iron phosphate) batteries, containing no nickel.
According to the Norilsk Nickel’s estimate, a significant number of nickel producers are unprofitable at current prices; therefore, further closures of unprofitable assets outside Indonesia are possible in the near future, despite the suspending of a series of nickel operations in 2024.
UNEXPECTED OPTIMISM OF INVESTMENT FUNDS
The production boom in Indonesia has resulted in a surplus of the metal accumulated primarily in the LME warehouses. The share of China’s nickel in the LME on-warrant stocks increased from zero in August 2023 to 65% by the end of August 2025. Indonesia’s metal has also been able to enter the LME system directly since last year. By the end of this September, LME warehouse stocks increased to 308,000 tonnes (from approximately 280,000 tonnes at the beginning of the year), the highest level since the exchange started reporting off-warrant stocks data in early 2020.
Dynamics of the exchange nickel stocks:
Nevertheless, investment funds began adding to their long positions in nickel in the middle of this year, relying on a price recovery, writes Andy Home, the senior metals columnist at Reuters. Last year, investment funds were bearish on nickel, and their net short position persisted as recently as June, but the current price rise bets, equivalent to 272,000 tonnes, represent the strongest bullish trend since March 2022.
The market is not giving any signals encouraging the investment funds to do so, as the LME’s three-month nickel futures are ‘stuck’ in a narrow range of $14,800 to $16,000; so, Home believes this may be a collective opinion: if nickel price doesn’t decline further, it will start rising at some point. With the LME warehouse stocks rising almost daily, nickel price dynamics appear surprisingly resilient, which is one of the reasons investors appear to believe that the metal may have found some level of cost support.
FORECASTS
According to the Kept consulting company’s analysts, nickel could see the largest price growth through 2029 among all major non-ferrous metals, including aluminum, copper, and zinc. Their forecast suggests that the metal price could rise from $15,400 per tonne by the end of 2025 to over $18,000 by 2029. They rely on the market experts’ opinion that Indonesia, despite its large production capacities, continues to face a number of challenges - that could impact future production, - including limited availability of nickel ore, declining nickel ore grades, and rising industry royalties in the industry.
Прогнозы цен - Price forecast. Факт - Actual prices. Прогноз - Projected prices. Металл - Metal. кв. - quarter. Никель - Nickel. (от II кв. 2025) - (compared to Q2 2025).
However, the consensus forecast by analysts at the moment has been revised downwards slightly, so the price of nickel is expected to be $15,400 to $17,000 per tonne in the next couple of years, with a tendency to increase to $18,000 per tonne in the medium term, Kept notes.
Igor Leikin for Rough&Polished
